Green bonds continue to boom
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The world's bond investors are continuing to finance the green transition at record rates: Issuance of green bonds — bonds whose proceeds are invested solely in sustainable projects — hit new highs in the first half of 2024.
Why it matters: For the world to meet its Paris Agreement goals, the UN estimates it needs to invest more than $3 trillion per year. Much if not most of that will have to come from the private sector, specifically from bond investors.
Follow the money: 2021 was the year that green bond issuance really exploded, with more than $1 trillion of green, social, and sustainability bonds issued in total, including a breakthrough €12 billion bond from the European Union.
- European investors still dominate the market, but issuers are truly international.
- Japan issued more than $12 billion of bonds in the first half of 2024, and just this week Masdar, Abu Dhabi's green energy company, issued its second green bond, for $1 billion.
Between the lines: Most G7 countries have issued many green bonds. Italy had the largest green bond of the year so far, with a €9 billion issuance in May. France, Germany, Australia, Canada, and the U.K. also participated in the market.
- The U.S. is the outlier, with zero green bond issuance to date.
What we're watching: Green bonds received a thumbs-up from the Treasury Borrowing Advisory Committee, a group of investors who buy Treasury bonds.
- Whether that will manifest in actual bond issuance, however, remains to be seen.
